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Cultivating a growth mindset and embracing challenges
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Effective learning frameworks and approaches
Buffet says we do not necessarily need to understand these more esoteric areas to invest capital. Far more important is to honestly define what we do know and stick to those areas. Our circle of competence can be widened, but only slowly and over time. Mistakes are most often made when straying from this discipline.
Circle of Competence applies outside of investing.
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What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that ...
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You have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose. You have to figure out where you’ve got an edge.
If you want to be the best tennis player in the world, you may start out trying and soon find o...
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Each of us, through experience or study, has built up useful knowledge in certain areas of the world. Some areas are understood by most of us, while some areas require a lot more specialty to evaluate.
The bits you understand well is your circle of competence.
For eg: Most of us under...
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fs.blog
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If you want to improve your odds of success in life and business, then define the perimeter of your circle of competence, and operate inside.
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Each of us, through experience or study, has built up useful knowledge on certain areas of the world. Some areas are understood by most of us, while some areas require a lot more specialty to evaluate.
It is important to honestly define what we know and stick to those areas.
...
If you want to improve your odds of success in life and business then define the perimeter of your circle of competence, and operate inside.
The concept has been used by Warren Buffett and relates to the importance of honestly definining what we do know and to stick to those areas....
Charlie Munger once commented that "in order to disagree with somebody you must first understand their argument better than they do."
The most common way people lose money is to overestimate how clever they are and how much they know. Even after a fifty-year investing career, both...
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